Blockchain start-ups saw both boom and bust as
initial interest waned when many realised they
lacked the technical talent to deliver and couldn’t
buy success. Money woes at banks persisted, forcing them to outsource people and non-differenti-ating technology to make room for true innovation,
creating a competitive advantage. Banks can’t cut
their way to profitability.

Predictions

The time is right for West Coast firms
to deploy their cash and innovative
tech to acquire a traditional market
data company. Focus will shift from
millennials to baby boomers as boomers retire at a rate of 11,000 per day
and retirement cash management
products become king.

Trends

2016 was characterised by
higher market volatility due
to unexpected outcomes of
the British EU referendum
vote, and, more recently
the US election. This led
to greater trading activity
and volumes as institutions
sought to exit positions. Despite extreme volatility, the
market structure performed
well and, in particular in
the case of Brexit, we saw
record trading volumes on
our platform.

Predictions

Looking to 2018, MiFID II will take centre stage as its implementation date of January 2018 moves ever closer. We expect
the buy-side to continue to adjust their trading patterns
well in advance of the regulation’s implementation date by
increasing their volume of block trading, in order to qualify
for MiFID II’s large in scale waiver.

More generally, we expect the trend of the empowerment
of the buy-side to continue and this is particularly important
in terms of secular trends we are seeing in market structure.
The potential Fed rate rise in December along with the Italian
referendum and elections in France and Germany next year
mean that volatility is likely here to stay and, therefore, we
expect that buy-side traders will make use of all of the tools
available to search for and execute on liquidity.

Sourcing liquidity in the corporate bond market has been an
ongoing challenge in 2016, both due to the dealers’ reduced
ability to make markets, as well as due to the supply issues
stemming from bond buying programmes of the Bank of
England and the European Central Bank. As a result, buy-side
firms have started to look to each other for liquidity and taken greater control of their trading activity in order to achieve
best execution.